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NI Achieves Record Revenue for Q4 and Fiscal Year 2022

Company’s transformation continues to deliver improved operating performance

Q4 2022 Highlights

  • All-time record revenue of $448 million, up 7 percent year over year

  • Q4 GAAP operating margin of 13 percent; Q4 non-GAAP operating margin of 25 percent

  • Strong diluted GAAP EPS of $0.30; all-time record diluted non-GAAP EPS of $0.63

  • Cash and cash equivalents of $140 million as of December 31, 2022

AUSTIN, Texas, January 31, 2023--(BUSINESS WIRE)--National Instruments Corporation (Nasdaq: NATI) today announced Q4 2022 revenue of $448 million, up 7 percent year over year and an all-time quarterly record.

In Q4 2022, the value of the company’s total orders was down 3 percent year over year. Geographic order growth for Q4 2022 compared with Q4 2021 was down 7 percent in the Americas, down 9 percent in APAC and up 7 percent in EMEA.

In Q4, GAAP gross margin was 68 percent and non-GAAP gross margin was 70 percent. Total Q4 GAAP operating expenses were $244 million, down 1 percent year over year. Total Q4 non-GAAP operating expenses were $201 million, down 6 percent year over year. GAAP operating margin was 13 percent in Q4, with GAAP operating income of $60 million, up 21 percent year over year. Non-GAAP operating margin was 25 percent in Q4, with non-GAAP operating income of $112 million, up 16 percent year over year.

GAAP net income for Q4 was $40 million, with diluted earnings per share ("EPS") of $0.30, and non-GAAP net income was $83 million, with non-GAAP diluted EPS of $0.63.

"2022 was a strong year as we continued to make strides in transforming NI into a higher-growth, more profitable, and more resilient company. Despite ongoing global macroeconomic uncertainty, we delivered on the 2022 targets we shared at our September investor conference with record revenue of $1.7 billion, up 13 percent YOY, and non-GAAP operating margin of 20 percent, up 130 bps as compared to 2021," said Eric Starkloff, NI president and CEO. "As we head into 2023, even in a recessionary environment, we now expect to exceed our 300 bps non-GAAP margin expansion target."

"In my first few weeks at NI, I've been impressed with the high level of talent in the organization, as well as the NI culture of engineering and commitment to its customers," said Daniel Berenbaum, NI CFO. "My focus will be on accelerating operational improvements to achieve our margin targets, improving working capital management and cash flow generation, and building investor confidence in our ability to execute. We have already undertaken a number of initiatives which underpin our confidence in being able to generate significant operating margin improvement in 2023."

NI’s non-GAAP results exclude, as applicable, the impact of purchase accounting fair value adjustments, stock-based compensation, amortization of acquisition-related intangibles, acquisition-related transaction and integration costs, taxes levied on the transfer of acquired intellectual property, foreign exchange gain/loss on acquisitions, restructuring charges, tax reform charges, disposal gains on buildings/assets and related charitable contributions, tax effects related to businesses held for sale, gain on sale of businesses, and capitalization and amortization of internally developed software costs. Reconciliations of NI’s GAAP and non-GAAP results are included as part of this news release.

FY 2022 Highlights

  • All-time record revenue of $1.66 billion, up 13 percent year over year

  • GAAP operating margin of 12 percent; Non-GAAP operating margin of 20 percent

  • Strong diluted GAAP EPS of $1.05; record diluted non-GAAP EPS of $1.93

  • Returned $300 million to stockholders through dividends and stock repurchases

In 2022, GAAP operating expenses were $964 million, up 4 percent year over year, and non-GAAP operating expenses were $836 million, up 1 percent year over year. GAAP net income in 2022 was $140 million, up 56 percent year over year, and non-GAAP net income was $255 million, up 14 percent year over year.

As of December 31, 2022, NI had $140 million in cash with $43 million in cash generated from operations in 2022. During Q4, NI paid $37 million in dividends. For the year, we returned $300 million to our stockholders through dividends and stock repurchases, including the repurchase of 3.8 million shares at an average price of $40.04 per share. The NI Board of Directors approved a dividend of $0.28 per share payable on March 6, 2023, to stockholders of record at the close of business on February 13, 2023.

Q1 2023 Guidance

  • GAAP revenue to be in the range of $415 million to $445 million, up 12 percent year over year at the midpoint

  • GAAP diluted EPS to be in the range of $0.14 to $0.28, up 2 cents year over year at the midpoint

  • Non-GAAP diluted EPS expected to be in the range of $0.48 to $0.62, up 34 percent year over year at the midpoint

Conference Call Information

Today, NI management will host a call with the investment community to discuss the company's financial performance in the fourth quarter. Investors can listen to the Q4 2022 earnings conference call beginning at 4:00 p.m. CT today. This event will be webcast in listen-only mode. Listeners may log on to the call at www.ni.com/investor-relations under the "Events and Presentations" section and select "Q4 2022 NATI Earnings Conference Call" to participate. The webcast will remain on the company site for 90 days.

Non-GAAP Presentation

To supplement NI’s financial statements presented on a GAAP basis, NI has provided non-GAAP financial information, including non-GAAP revenue or net sales, gross profit, gross margin, operating expenses, operating income, operating margin, provision for income taxes, net income, net margin and diluted EPS and non-GAAP guidance for diluted EPS. A reconciliation of the adjustments to GAAP results is included in the tables below. Additionally, certain non-GAAP financial measures presented on a forward-looking basis, such as non-GAAP operating margin, were not reconciled to the comparable GAAP financial measures because the reconciliation could not be performed without unreasonable efforts due to the unpredictability of the amounts and timing of events affecting the items we exclude from non-GAAP measures. Non-GAAP financial information is not meant as a substitute for GAAP results, but is included because management believes such information is useful to our investors for informational and comparative purposes. In addition, certain non-GAAP financial information is used internally by management to evaluate and manage the company. The non-GAAP financial information used by NI may differ from that used by other companies. These non-GAAP measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with GAAP.

Forward-Looking Statements

This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 including without limitation those statements about our expectations of accelerating growth and progress to meet or exceed our financial targets and long-term financial model, our continued momentum across regions and business units, our opportunities to drive growth, profitability and efficiency in our business, confidence in our strategy and the strategic changes made to our business, our ability to successfully integrate acquisitions and execute our growth strategy, our ability to turn backlog to revenue, our ability to drive customer demand through focus on high growth opportunities, the impacts of war in Europe, supply chain constraints and software licensing model transition on our financial results, the outcome of the Company’s restructuring activities and strategic alternatives process and our guidance and expectations for our Q1 2023 revenue, diluted EPS and non-GAAP diluted EPS, and future operating expenses, backlog, lead times, gross margin, operating margin and tax rate. These statements are subject to a number of risks and uncertainties, and actual results may differ materially from any future results expressed or implied by the forward-looking statements. Risks and uncertainties include without limitation: the global shortage of key components; effect of the global economic and geopolitical conditions; our international operations and foreign economies; adverse public health matters, including epidemics and pandemics such as the COVID-19 pandemic; our ability to effectively manage our partners and distribution channels; interruptions in our technology systems or cyber-attacks on our systems; the dependency of our product revenue on certain industries and the risk of contractions in such industries; concentration of credit risk and uncertain conditions in the global financial markets; our ability to compete in markets that are highly competitive; our ability to release successful new products or achieve expected returns; the risk that our manufacturing capacity and a substantial majority of our warehousing and distribution capacity are located outside of the U.S.; our dependence on key suppliers and distributors; longer delivery lead times from our suppliers; risk of product liability claims; dependence on our proprietary rights and risks of intellectual property litigation; the continued service of key management, technical personnel and operational employees; our ability to comply with environmental laws and associated costs; our ability to maintain our website; the risks of bugs, vulnerabilities, errors or design flaws in our products; our restructuring activities; our exposure to large orders; our shift to more system orders; our ability to effectively manage our operating expenses and meet budget; fluctuations in our quarterly results due to factors outside of our control; our outstanding debt; the interest rate risk associated with our variable rate indebtedness; seasonal variation in our revenues; our ability to comply with laws and regulations; changes in tax rates and exposure to additional tax liabilities; our ability to make certain acquisitions or dispositions, integrate the companies we acquire or separate the companies we sold and/or enter into strategic relationships; risks related to currency fluctuations; provisions in charter documents and Delaware law that delay or prevent our acquisition; and risks related to our strategic review process. In addition, our ability to declare and/or pay declared dividends is subject to compliance with the terms of our existing credit agreement. The company directs readers to its Form 10-K for the year ended December 31, 2021, its subsequent Form 10-Qs, and the other documents it files with the SEC for other risks associated with the company’s future performance. These documents contain and identify important factors that could cause our actual results to differ materially from those contained in our forward-looking statements. All information in this release is as of the date above. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.

About NI

At NI, we bring together people, ideas and technology so forward thinkers and creative problem solvers can take on humanity’s biggest challenges. From data and automation to research and validation, we provide the tailored, software-connected systems engineers and enterprises need to Engineer Ambitiously™ every day.

National Instruments, NI, ni.com and Engineer Ambitiously are trademarks of National Instruments. Other product and company names listed are trademarks or trade names of their respective companies. (NATI-F)

National Instruments

Condensed Consolidated Balance Sheets

(in thousands)

December 31,

December 31,

2022

2021

(unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$

139,799

$

211,106

Accounts receivable, net

445,279

341,275

Inventories, net

388,164

289,243

Prepaid expenses and other current assets

115,677

89,925

Total current assets

1,088,919

931,549

Property and equipment, net

265,380

253,668

Goodwill

615,734

575,992

Intangible assets, net

200,850

220,418

Operating lease right-of-use assets

59,176

58,641

Other long-term assets

128,479

74,717

Total assets

2,358,538

2,114,985

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable (1)

54,639

59,063

Accrued compensation

71,422

111,261

Deferred revenue

137,208

137,818

Operating lease liabilities

13,834

13,137

Other taxes payable

67,615

59,109

Debt - current

25,000

Accrued expenses and other current liabilities (1)

153,157

64,826

Total current liabilities

522,875

445,214

Debt - non-current

516,637

300,000

Deferred income taxes

1,676

14,249

Income tax payable - non-current

40,646

54,195

Deferred revenue - non-current

63,066

32,822

Operating lease liabilities - non-current

30,588

30,468

Other long-term liabilities

26,926

14,340

Total liabilities

1,202,414

891,288

Stockholders' equity:

Preferred stock

Common stock

1,310

1,323

Additional paid-in capital

1,207,420

1,129,647

Retained (deficit) earnings

(14,741

)

112,858

Accumulated other comprehensive loss

(37,865

)

(20,131

)

Total stockholders' equity

1,156,124

1,223,697

Total liabilities and stockholders' equity

$

2,358,538

$

2,114,985

(1): In the fourth quarter 2022, we reclassified $26.9 million of accrued liability balances from "Accounts payable" to "Accrued expenses and other current liabilities." To conform with the current period presentation, the following amounts reported in previous periods have also been reclassified: $25.6 million at September 30, 2022, $29.8 million at June 30, 2022, $23.2 million at March 31, 2022, and $24.2 million at December 31, 2021.

National Instruments

Condensed Consolidated Statements of Income

(in thousands, except per share data, unaudited)

Three Months Ended

Years Ended

December 31,

December 31,

2022

2021

2022

2021

Net sales:

Product

$

412,607

$

377,303

$

1,500,716

$

1,304,609

Software maintenance

35,669

43,338

156,259

165,072

Total net sales

448,276

420,641

1,656,975

1,469,681

Cost of sales:

Product

139,700

119,857

517,854

406,342

Software maintenance

4,621

3,739

16,870

14,621

Total cost of sales

144,321

123,596

534,724

420,963

Gross profit

303,955

297,045

1,122,251

1,048,718

68

%

71

%

68

%

71

%

Operating expenses:

Sales and marketing

118,252

122,304

483,267

467,352

Research and development

81,100

92,301

331,710

335,986

General and administrative

44,272

32,543

148,841

127,215

Total operating expenses

243,624

247,148

963,818

930,553

Gain on sale of assets

33,636

Operating income

60,331

49,897

192,069

118,165

Other income (expense)

(11,571

)

(4,739

)

(20,193

)

(14,590

)

Income before income taxes

48,760

45,158

171,876

103,575

Provision for income taxes

8,694

4,822

32,232

14,260

Net income

$

40,066

$

40,336

$

139,644

$

89,315

Basic earnings per share

$

0.31

$

0.31

$

1.06

$

0.68

Diluted earnings per share

$

0.30

$

0.30

$

1.05

$

0.67

Weighted average shares outstanding -

Basic

130,842

132,215

131,738

132,311

Diluted

131,746

133,225

132,533

133,562

Dividends declared per share

$

0.28

$

0.27

$

1.12

$

1.08

National Instruments

Condensed Consolidated Statements of Cash Flows

(in thousands)

Years Ended December 31,

2022

2021

(unaudited)

Cash flow from operating activities:

Net income

$

139,644

$

89,315

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

90,707

99,402

Stock-based compensation

78,615

74,583

Disposal gain on sale of business/asset

(33,636

)

Loss from equity-method investees

163

5,719

Deferred income taxes

(71,590

)

(15,796

)

Net change in operating assets and liabilities

(160,939

)

(109,724

)

Net cash provided by operating activities

42,964

143,499

Cash flow from investing activities:

Acquisitions, net of cash received

(72,319

)

(223,080

)

Proceeds from sale of assets/business, net of cash divested

40,987

Capital expenditures

(48,193

)

(40,975

)

Capitalization of internally developed software

(388

)

(1,463

)

Additions to other intangibles

(3,558

)

(2,751

)

Acquisitions of equity-method and other investments

(15,753

)

Sales and maturities of short-term investments

60,297

Net cash used by investing activities

(83,471

)

(223,725

)

Cash flow from financing activities:

Proceeds from term loan

500,000

Payments of term loan

(6,250

)

(98,750

)

Proceeds from revolving line of credit

268,000

300,000

Payments of revolving line of credit

(518,000

)

Debt issuance costs

(2,348

)

(1,993

)

Proceeds from issuance of common stock

31,815

32,518

Repurchase of common stock

(151,830

)

(55,000

)

Dividends paid

(147,835

)

(143,113

)

Net cash provided by (used by) financing activities

(26,448

)

33,662

Impact of changes in exchange rates on cash

(4,352

)

(2,562

)

Net change in cash and cash equivalents

(71,307

)

(49,126

)

Cash and cash equivalents at beginning of period

211,106

260,232

Cash and cash equivalents at end of period

$

139,799

$

211,106

The following tables provide details with respect to the amount of GAAP charges related to stock-based compensation, amortization of acquisition-related intangibles and fair value adjustments, acquisition-related transaction costs, disposal gains on sale of business/assets and related charitable contributions, tax effects related to businesses held-for-sale, capitalization and amortization of internally developed software costs, and restructuring charges that were recorded in the line items indicated below (unaudited) (in thousands):

Three Months Ended

Years Ended

December 31,

December 31,

2022

2021

2022

2021

Stock-based compensation

Cost of sales

$

884

$

1,092

$

4,658

$

4,580

Sales and marketing

4,991

6,284

26,430

25,233

Research and development

6,034

5,811

24,556

23,515

General and administrative

5,862

5,335

22,970

21,384

Provision for income taxes

(2,418

)

(2,010

)

(10,105

)

(12,047

)

Total

$

15,353

$

16,512

$

68,509

$

62,665

Amortization of acquisition-related intangibles and fair value adjustments

Net sales

$

254

$

352

$

1,367

$

2,324

Cost of sales

5,878

6,700

22,903

19,391

Sales and marketing

4,955

3,334

22,379

10,192

Research and development

320

(320

)

320

Other expense (income)

467

531

1,968

2,007

Provision for income taxes

(1,705

)

(1,626

)

(7,507

)

(4,071

)

Total

$

9,849

$

9,611

$

40,790

$

30,163

Acquisition-related transaction and integration costs, restructuring charges, and other(1)(2)

Net sales

$

$

$

(411

)

$

Cost of sales

1,270

25

9,819

(25

)

Sales and marketing

7,014

1,687

12,478

7,759

Research and development

2,422

9,682

3,977

11,104

General and administrative (2)

11,068

865

15,547

8,254

Gain on sale of asset (2)

(33,636

)

Other expense (income) (1)

(400

)

(5,685

)

4,322

Provision for income taxes

(4,433

)

(2,708

)

60

(6,837

)

Total

$

16,941

$

9,551

$

2,149

$

24,577

(1): During the first quarter of 2021, we recognized a $3.5 million impairment loss related to one of our equity-method investments.

(2): During the third quarter of 2022, the company recognized a gain of $34 million related to the sale of land and office buildings, presented within "Gain on sale of assets". The company also recognized a charitable contribution expense of $10 million related to an infrequent donation using a portion of the proceeds from the sale of the building, presented within "General and administrative".

(Capitalization) and amortization of internally developed software costs

Cost of sales

$

773

$

5,041

$

5,863

$

23,674

Research and development

(188

)

(388

)

(1,433

)

Provision for income taxes

(179

)

(1,085

)

(1,238

)

(4,877

)

Total

$

594

$

3,768

$

4,237

$

17,364

National Instruments

Reconciliation of GAAP to Non-GAAP Measures

(in thousands, unaudited)

Three Months Ended

Years Ended

December 31,

December 31,

2022

2021

2022

2021

Reconciliation of Gross Profit to Non-GAAP Gross Profit

Gross profit, as reported

$

303,955

$

297,045

$

1,122,251

$

1,048,718

Stock-based compensation

884

1,092

4,658

4,580

Amortization of acquisition-related intangibles and fair value adjustments

6,132

7,052

24,270

21,715

Acquisition transaction and integration costs, restructuring charges and other

1,270

25

9,408

$

(25

)

Amortization of internally developed software costs

773

5,041

5,863

23,674

Non-GAAP gross profit

$

313,014

$

310,255

$

1,166,450

$

1,098,662

Non-GAAP gross margin

70

%

74

%

70

%

75

%

Reconciliation of Operating Expenses to Non-GAAP Operating Expenses

Operating expenses, as reported

$

243,624

$

247,148

$

963,818

$

930,553

Stock-based compensation

(16,887

)

(17,430

)

(73,956

)

(70,132

)

Amortization of acquisition-related intangibles and fair value adjustments

(4,955

)

(3,654

)

(22,059

)

(10,512

)

Acquisition transaction and integration costs, restructuring charges and other

(20,504

)

(12,234

)

(32,002

)

(27,117

)

Capitalization of internally developed software costs

188

388

1,433

Non-GAAP operating expenses

$

201,278

$

214,018

$

836,189

$

824,225

Reconciliation of Operating Income to Non-GAAP Operating Income

Operating income, as reported

$

60,331

$

49,897

$

192,069

$

118,165

Stock-based compensation

17,771

18,522

78,614

74,712

Amortization of acquisition-related intangibles and fair value adjustments

11,087

10,706

46,329

32,227

Acquisition transaction and integration costs, restructuring charges and other

21,774

12,259

41,410

27,092

Net amortization of internally developed software costs

773

4,853

5,475

22,241

Gain on sale of business/assets

(33,636

)

Non-GAAP operating income

$

111,736

$

96,237

$

330,261

$

274,437

Non-GAAP operating margin

25

%

23

%

20

%

19

%

Reconciliation of Provision for income taxes to Non-GAAP Provision for income taxes

Provision for income taxes, as reported(1)

$

8,694

$

4,822

$

32,232

$

14,260

Stock-based compensation

2,418

2,010

10,105

12,047

Amortization of acquisition-related intangibles and fair value adjustments

1,705

1,626

7,507

4,071

Acquisition transaction and integration costs, restructuring charges and other

4,433

2,708

6,378

6,837

Net amortization of internally developed software costs

179

1,085

1,238

4,877

Gain on sale of business/assets

(6,438

)

Non-GAAP provision for income taxes(1)

$

17,429

$

12,251

$

51,022

$

42,092

(1): The income tax effect related to each non-GAAP item is calculated based on the tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlying non-GAAP adjustment, and considers the current and deferred tax impact of those adjustments.

Reconciliation of GAAP Net Income and Diluted EPS to Non-GAAP Net Income and Non-GAAP Diluted EPS

(in thousands, except per share data, unaudited)

Three Months Ended

Years Ended

December 31,

December 31,

2022

2021

2022

2021

Net income, as reported

$

40,066

$

40,336

$

139,644

$

89,315

Adjustments to reconcile net income to non-GAAP net income:

Stock-based compensation

17,771

18,522

78,614

74,712

Amortization of acquisition-related intangibles and fair value adjustments

11,554

11,237

48,297

34,234

Acquisition transaction and integration costs, restructuring charges and other

21,374

12,259

35,725

31,414

Net amortization of internally developed software costs

773

4,853

5,475

22,241

Gain on sale of business/asset

(33,636

)

Income tax effects and adjustments(1)

(8,735

)

(7,429

)

(18,790

)

(27,832

)

Non-GAAP net income

$

82,803

$

79,778

$

255,329

$

224,084

Non-GAAP net margin

18.5

%

18.9

%

15.4

%

15.2

%

Diluted EPS, as reported

$

0.30

$

0.30

$

1.05

$

0.67

Adjustment to reconcile diluted EPS to non-GAAP diluted EPS

Stock-based compensation

0.14

0.14

0.59

0.56

Amortization of acquisition-related intangibles and fair value adjustments

0.09

0.09

0.37

0.26

Acquisition transaction and integration costs, restructuring charges and other

0.16

0.09

0.27

0.23

Net amortization of internally developed software costs

0.01

0.04

0.04

0.17

Gain on sale of business/asset

(0.25

)

Income tax effects and adjustments(1)

(0.07

)

(0.06

)

(0.14

)

(0.21

)

Non-GAAP diluted EPS

$

0.63

$

0.60

$

1.93

$

1.68

(1): The income tax effect related to each non-GAAP item is calculated based on the tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlying non-GAAP adjustment, and considers the current and deferred tax impact of those adjustments.

Weighted average shares outstanding

Basic

130,842

132,215

131,738

132,311

Diluted

131,746

133,225

132,533

133,562

Reconciliation of GAAP Diluted EPS Guidance to Non-GAAP Diluted EPS Guidance

(unaudited)

Three Months Ended

March 31, 2023

Low

High

GAAP Diluted EPS, guidance

$

0.14

$

0.28

Adjustment to reconcile diluted EPS to non-GAAP diluted EPS:

Stock-based compensation

0.14

0.14

Amortization of acquisition-related intangibles and fair value adjustments

0.08

0.08

Acquisition transaction and integration costs, restructuring charges and other

0.19

0.19

Net amortization of internally developed software costs

Income tax effects and adjustments(1)

(0.07

)

(0.07

)

Non-GAAP Diluted EPS, guidance

$

0.48

$

0.62

(1): The income tax effect related to each non-GAAP item is calculated based on the tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlying non-GAAP adjustment, and considers the current and deferred tax impact of those adjustments.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230131005964/en/

Contacts

Marissa Vidaurri
Vice President of Investor Relations
(512) 683-5215